MCX-SX case: CBI examines SEBI's chief U K Sinha

CBI has examined Securities and Exchange Board of India (Sebi) Chairman U K Sinha in connection with a preliminary enquiry (PE) into granting of licence to Jignesh Shah-founded Financial Technologies (India) group for setting up MCX Stock Exchange.

The decision to quiz Sinha, as also former Sebi Chairman M Damodaran, was taken after examination of another former Sebi chief C B Bhave earlier this month, during which the agency sleuths were told that public interest was involved in grant of licence to MCX-SX to trade in currency derivatives. Damodaran will also be examined soon.

Bhave, a 1975 batch IAS officer from Maharashtra, also made it clear that there was no undue pecuniary benefit to Jignesh Shah entities as a result of this decision. The CBI has claimed that Damodaran cleared MCX-SX file despite knowledge of searches on Shah and other investigations by the Income Tax department.

The former Sebi chief has, however, claimed that the report about Income Tax searches reached him later. MCX-SX was set up by Financial Technologies (India) FTIL and its commodity exchange arm MCX earlier as a currency derivatives exchange and began functioning as a full-fledged stock exchange last year after a prolonged battle with Sebi.

The approval for full-fledged stock exchange came during the tenure of Sinha, who took charge of the Sebi in February 2011. He got an extension of two years in February this year. Bhave was examined by a team of CBI officers two months after the agency registered a PE against him, another former member K M Abraham and FTIL and MCX-SX, among others.

Bhave had denied any quid pro quo as alleged by CBI for grant of permission to the bourse and said the agency wanted to understand the public interest involved in licence grant. He becaame Sebi Chairman in February 2008 and his three-year term ended in February 2011. Abraham's term as a whole-time member of Sebi also ended in 2011.